4/09/2008

Some members of the Federal Reserve are worried about the possibility of a "severe and protracted downturn" in the U.S. economy that could last into next year, according to the minutes of the central bank's latest meeting released Tuesday.

The Fed said its staffers now expect the nation's gross domestic product (GDP) to shrink in the first half of this year, the clearest signal yet from the central bank that its members think the economy could be close to entering a recession -- if it hasn't already. Many Fed policymakers indicated that a downturn in the economy in the first half of the year "now appeared likely."

The minutes from the March 18 meeting show that some Fed policymakers are concerned the problems in the "housing sector had deepened and that considerable uncertainty surrounded the outlook for housing."

The release of the minutes come a week after Fed Chairman Ben Bernanke said during Congressional testimony that a "recession was possible." He also said that real GDP might grow slightly in the first half of the year but conceded that it could also contract.full story